As an employer, if you provide fringe benefits to employees, or others associated with your business, you must generally pay fringe benefit tax (FBT) on the value of these benefits. So, when are you liable for FBT? Any time you provide non-cash benefits to your staff. The list is potentially endless but in practice, most
Due to the COVID pandemic, the Inland Revenue Department (IRD) has been taking a much more relaxed approach to outstanding tax debt – but now IRD is ready to crack down. Since the start of July, the IRD have stepped up their efforts to pursue outstanding amounts from taxpayers who owe tax. PAYE and KiwiSaver
When you make a payment to IRD you will need your IRD number as a reference. Make sure you choose the right account type when making payments, as mis-coding your payment could result in IRD refunding the payment or missing future tax payments which may cause penalties to be charged by IRD. GST and Provisional
If you receive income from overseas sources, sometimes working out the tax can be tricky. Here are twelve points to consider. #1 Declare rental income from overseas properties. You can claim deductions for rental-related expenses, and you may also be able to claim a credit for tax paid in the other country on that income.
Do you earn more than $180,000 in taxable income? Inland Revenue is proposing changes that will make it much tougher to avoid paying the full 39% top tax rate. In 2021, Inland Revenue increased the top tax rate to 39%. That rate is higher than both the 28% tax rate for companies and the 33%
With over 100 tax changes that came into effect in April, there’s sure to be something that will have an impact on you or your business. Take a look at our summary of the 13 most influential areas of change. Matariki is now a public holiday for tax purposes. GST is being tweaked for: groups;
If you earn income from interest or dividends, or if you pay business interest to investors, it’s a good idea to understand how Resident Withholding Income and Tax (RWT) affects you. Resident withholding income includes interest and dividends. Generally, resident withholding tax (RWT) must be paid on it. If you are a New Zealand tax
Although this year many businesses are having to do their end of year celebrations differently, this is still the time of year when you usually spend more than usual on staff and client entertainment. Inland Revenue provides specific rules regarding different types of entertainment expenses. Here are some rules regarding Christmas business expenses that are
It is being proposed that beginning with the 2021/22 financial year (typically for the year ending 31 March 2022), all trusts will need to file financial statements that include a profit and loss statement and balance sheet (as per the Taxation (Income Tax Rate and Other Amendments) Bill. There will also be additional information
The first compliance date for rental properties to meet the new healthy homes standards was 1st July 2021. Private rentals must meet the 5 healthy homes standards within 90 days of any new or renewed tenancies which began on or after that date. New consumer credit laws came into effect on 1st
The existing Clean Car Discount scheme (effective 1 July 2021 to 31 December 2021) aims to encourage New Zealanders to purchase electric or low-CO2 emission light vehicles. This is by making the cost of eligible new and used fuel-efficient vehicles comparable to petrol and diesel vehicles. The Clean Car Discount only applies to new and
When approaching a bank or other intermediary for the purpose of borrowing funds, they may advise a structure that is easy for them and meets their internal requirements. This is not necessarily, and often times is exactly the opposite of, our recommended advice on how to structure loans in order to maximise tax deductions and
From the 2021 year onwards, any PIE income and the tax deducted at your Prescribed Investor Rate (PIR) will need to be disclosed in your end of year tax return so IRD can determine whether an adjustment needs to be made for any incorrect PIE tax deductions. Tax at the PIR is no longer treated
Businesses with tax debts under $10,000 should note that the IRD will be taking action soon. The IRD will begin contacting taxpayers with outstanding tax arrears under $10,000 from 1st June 2021 if: The debt is more than 60 days overdue, and The amount of the debt is between $200 and $10,000, and The debt
Q. What’s the big deal about business expenses? A. Put simply, business expenses can help to lower your tax bill. Many business expenses can be claimed to offset your business income, reducing the amount of tax you need to pay. So it’s in your interest to know what expenses you can claim. Q. Who can
If your business received the Covid-19 Resurgence Support Payment (RSP) these funds must have been used to cover business-related expenses, such as wages and fixed costs. It is not subject to income tax, and the expenses funded by the RSP are not deductible. For GST-registered businesses, the RSP is subject to GST and needs
From time to time there will be an IRD email, phone or text scam that does the rounds. Inland Revenue have a dedicated section on their website here, which includes details of the latest scams as well as a facility for reporting anything suspicious. There are certain things to be aware of that may signify
If you have made any donations of $5 or more during the financial year, you may be able to claim these as tax credits. For claiming donations as tax credits: The charity or organisation you donated to must be an approved donee as per the IRD’s ‘Approved Donee Organisations’ list ; The donation must not
The IRD has reminded businesses that they still need to file their company’s tax return if they have not already done so. For companies without a tax agent’s extension of time, the due date was 7 July so although the Covid-19 disruptions have been taken into account, this does still need to be actioned
Any self-employed individuals such as sole traders, contractors and partners of partnerships, who are in their first year of operating could be eligible for tax discounts by paying their income tax early. In the first year of trading, sole traders, contractors and partners usually do not need to pay their Terminal Tax (year-end tax) for
The government’s Small Business Cashflow Scheme (SBCS) has been extended to remain open for applications for another three years until 31st December 2023. No interest is payable if the loan is repaid in full within two years (this was previously one year), and there are now fewer specified restrictions on what the money can
Are you confused about the rules regarding deducting low-value assets on rental properties? Let’s take a look at the scenario where rental property owners have made improvements to the property with low-value asset purchases. They have added insulation in the ceiling and installed an extractor fan in the external wall of the bathroom. The government
If you are one of the many New Zealand businesses who are looking at changing the way you do business to survive the COVID-19 crisis there is help at hand. Business.govt.nz has a number of tools and tips to help businesses who need to change direction. These include a 4-step plan consisting of identifying
A reminder that the government has increased the threshold for the 100% instant depreciation claim on assets to encourage businesses to continue investing. The asset cost threshold for this has increased from $500 to $5,000 for assets purchased from 17 March 2020 to 16 March 2021. Businesses can immediately deduct the entire cost as
UHY Haines Norton Manager Paul Eckford explains why the Accounting Income Method for provisional tax could be a good option for small businesses struggling with managing cash flow. Provisional tax can be a real burden on cash flow. Normally due in 3 instalments during the year, most small businesses must budget for these payments which
The IRD advises that there are several options you can explore if you are having trouble making your tax payments. One option is to set up an arrangement in myIR for paying off your tax in instalments. Or if you are paying provisional tax because of anticipating making a profit but believe that you
When you are applying for New Zealand Superannuation you must choose a tax code. Superannuation tax codes depend on whether you are receiving other income. If NZ Super Is Your Only Income If NZ Super is your only income then your tax code should be M. The exception to this is if you have a
COVID-19 is having a serious impact on New Zealand businesses in many ways. These include potential GST implications if supplies have been cancelled or there is a change in the use of an asset. GST On Cancelled Supplies If GST is returned on a supply that is subsequently cancelled, a GST adjustment will be required
Claiming business expenses against your income is a great way to save you money by lowering your tax bill. The number one rule about claiming business deductions is that the expense must be incurred in deriving or earning business income. That's why there isn't a definitive list of claimable business expenses because there must be
Many of our clients prepare and file their GST returns and payments for their small businesses. As is the case with all taxes, it’s important to calculate your GST correctly - getting it wrong can prove to be an expensive exercise! Here we share some GST mistakes we commonly come across: Not registering for GST
GST rules for low-value imported goods came into effect on 1st December 2019. From 1st December 2019 onwards, overseas suppliers of goods are required to charge GST on their supplies to New Zealand customers. These rules apply where the value of the goods (excluding GST) is NZ$1,000 or less, known as “distantly taxable goods” (DTG),
We explain what resident withholding tax is, who it applies to, rates and rules for making payments. What Is Resident Withholding Tax? Resident withholding tax (RWT) is: The initial tax you pay on interest and dividends you earn from your New Zealand bank accounts and investments; Whereas the initial tax you pay on income from
It’s common for businesses to spend money on entertaining customers as a way of showing appreciation for their custom and encouraging loyalty. However, deciphering whether client entertainment expenses are non-deductible, 50% tax deductible or 100% tax deductible in line with the IRD’s rules can be a real challenge. From the IRD’s perspective, the types of
A GST-registered person who purchases “second-hand goods” in the course of a taxable activity may be able to deduct a proportion of the purchase price as input tax. A deduction may only be made if: The goods are purchased for making taxable supplies; The goods are in New Zealand; The supply is a non-taxable supply,
While many expenses incurred in the course of doing business can be claimed to reduce your income tax, certain expenses are not deductible for tax purposes. These include: Late filing and late payment penalties imposed by the IRD. Costs related to breaking the law, such as speeding tickets or parking fines. Insurance premiums relating to
If your business provides sponsorship to an individual or organisation, it may be tax deductible. Sponsorship is different to ‘advertising’ or ‘donations’. It is defined as when the taxpayer incurring the expenditure expects that his/her business will be promoted in some way, whilst the sponsorship recipient will also be benefited in some way. The IRD’s
Workers all around the world are increasingly favouring short-term jobs, or gigs, in place of more traditional permanent roles. Gig workers who take casual short-term jobs fall into the same category as contractors, free-lancers and self-employed people who must account for their own tax on every job they take. For tax purposes, the same rules
There are now four ways to manage provisional tax: The standard uplift method, where three payments are made during your financial year based on your tax bill from the previous year plus 5% (this is the default method). The GST ratio method, where provisional tax is calculated based on your GST supplies and payments align
Renting out your home, rental property or holiday home for a short-term period can be a great way to make some extra income when you’re not personally using those properties but don’t want to lock in long-term renters. Airbnb, Bookabach and other online accommodation companies make it extremely easy to list your property as they
Do you sell pot plants or homemade jam to friends or at your local weekend market? While this may be just a hobby to you, in the eyes of IRD it could be classed as a business and therefore is eligible to be taxed. Regular sales – however small they may be – can mean
One issue we see quite often is clients making tax payments to the wrong IRD account, or against the wrong financial year. IRD Tax Accounts When making tax payments to Inland Revenue it is important to select the right account the payment is being made to. If payment has been made to the wrong account
Earlier this year the bright-line residential property rule was extended from two years to five years. The original two-year period still applies to properties purchased between 1st October 2015 and 28th March 2018, and from 29th March 2018 onwards the five-year bright-line test now applies. There are three main exclusions to the bright-line test: Family
The short answer is yes, provided the benefit from the insurance policy is taxable. The real question to ask is: is your income protection insurance taxable? Indemnity or Loss of Earnings Insurance A claim made against an Indemnity or Loss of Earnings policy relates directly to the loss of income and the pay-out is based
Fringe Benefit Tax (FBT) affects many SME owners and yet can be difficult to understand and calculate correctly. In this article we explain exactly what FBT is and how it works. What Is A Fringe Benefit And Why The Tax? A fringe benefit arises when an employer provides a non-cash benefit to an employee, including
Most goods and services in New Zealand are subject to GST at the rate of 15%. We clarify the general rules for New Zealand businesses regarding who must register for GST, and explain the different accounting and filing methods. GST Registration You can voluntarily register for GST if you are in business. It is compulsory
Taking the guesswork out of common SME topics so you can get it “right first time”. In this article we look at the rules regarding entertainment expenses. There is often confusion around which expenses can be claimed under ‘Entertainment’ and what is the tax deductibility criterion. Certain entertainment expenses are 100% deductible, while some are
